Louise Hickey Plaintiff And: North Atlantic Marine Supplies & Services Inc. Defendant, 2019 NLSC 194

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Hickey v. North Atlantic Marine Supplies & Services Inc. , 2019 NLSC 194 Date : October 30, 2019 Docket : 201701G8454 Between: Louise Hickey Plaintiff And: North Atlantic Marine Supplies & Services Inc. Defendant Before: Justice Donald H. Burrage Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: October 24, 2019

Summary: Following a Rule 17A

summary trial, the Defendant was ordered to honor the terms of settlement of the Plaintiff’s claim for wrongful dismissal.

Appearances: Peter A. O’Flaherty, Q.C. Appearing on behalf of the Plaintiff F. Stephen Fitzgerald Appearing on behalf of the Defendant Authorities Cited: CASES CONSIDERED: Dalley v. Northern Arm (Town) , 2016 NLTD(G) 68; Mifflin v. North Atlantic Refining Limited , 2017 NLTD(G)140; Iofcea v. Dinoiu , 2018 ONSC 6882 RULES CONSIDERED: Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sch.

D REASONS FOR JUDGMENT Burrage, J. : INTRODUCTION [ 1 ] On 10 August 2017, after approximately 18 years of service, the Plaintiff, Louise Hickey, was dismissed without cause from her employment with the Defendant, North Atlantic Marine Supplies & Services Inc. (North Atlantic). [ 2 ] Following her termination, Ms. Hickey retained legal counsel who put North Atlantic on notice that she would be claiming damages and pay in lieu of notice, arising from her dismissal. [ 3 ] Negotiations then ensued between Ms. Hickey’s counsel and counsel for North Atlantic towards a resolution of Ms. Hickey’s claim. Ms.

Hickey maintains that the parties eventually reached a binding settlement and now seeks to have that settlement enforced. The route chosen is the

summary trial procedure under Rule 17A of the Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sch. D . [ 4 ] While agreeing that the issue is appropriate for a

summary trial, North Atlantic, who is now represented by counsel not involved in the negotiations, acknowledges that a settlement amount was agreed upon ($135,562.55), but argues that there was no agreement on the manner and timing of how the pay in lieu portion of the settlement would be paid. According to North Atlantic, how the pay in lieu would be paid was always an essential term of any agreement, and as there was no consensus ad idem on this term, there can be no binding settlement. [ 5 ] Ms.

Hickey, on the other hand, argues that there was an agreement on payment, but in the alternative, the manner of payment was not an essential term of any settlement. Rather, the manner of payment related to the execution (final resolution) of the settlement, rather than its formation. issue [ 6 ] The question to be addressed is whether there was a consensus ad idem between the parties on all essential terms of the settlement, such that it ought to be given effect. Test for

Summary Trial [ 7 ] As the foregoing question is being asked in the context of a

summary trial, I first ask whether Ms. Hickey has met the threshold test for this procedure. As noted, North Atlantic accepts that she has. I agree. [ 8 ] There is a sufficient evidentiary basis to determine if there was a consensus ad idem on a settlement agreement, and, if so, whether North Atlantic is in breach. [ 9 ] The evidentiary record consists of two affidavits; that of Ms. Hickey dated 11 January 2019 and a representative of North Atlantic, Herbert Breau, dated 23 August 2019. Both Ms. Hickey and Mr. Breau were cross-examined. In addition, appended to the affidavit of Ms.

Hickey are copies of the relevant correspondence between counsel for Ms. Hickey and counsel for North Atlantic, detailing the settlement negotiations. While this correspondence is designated “Without Prejudice”, it is admissible for the purpose of determining if an agreement was reached. The facts are as largely set out in this correspondence, the issue is not complex and there are no issues of credibility (see Dalley v. Northern Arm (Town) , 2016 NLTD(G) 68). [ 10 ] The denial by North Atlantic that a settlement agreement was reached raises a genuine issue for trial.

I am satisfied, however, that the question can appropriately answered by way of

summary trial on the evidentiary record presented.

the facts [ 11 ] As noted, on 10 August 2017, Ms. Hickey was dismissed, without cause, from her employment with North Atlantic. On 12 August 2017 Ms. Hickey was advised in writing by Mr. Breau, on behalf of North Atlantic, that she would “continue on payroll until we have arrived at agreed termination terms and conditions.” [ 12 ] By letter dated 15 September 2017, counsel for North Atlantic advised counsel for Ms. Hickey that North Atlantic would continue to make payment to her until 22 September 2017. There was apparently a disconnect in communication, however, as Ms.

Hickey received no further payment from North Atlantic after the 15 th . It was agreed in subsequent negotiations, regarding pay in lieu of notice, that North Atlantic would receive a credit for the period 10 August to 15 September 2017. [ 13 ] In the 15 September 2017 letter counsel for North Atlantic also offered Ms. Hickey salary continuance of $100,000, less amounts already paid and applicable statutory deductions. [ 14 ] On 26 September 2017 counsel for Ms. Hickey replied to say that his client “will not agree to accept salary continuance during the period of reasonable notice”.

Counsel countered with a lump sum payment equivalent to 15 months’ pay and benefits. [ 15 ] On 26 October 2017, counsel for North Atlantic countered, this time offering 13 months’ pay in lieu of notice, to be paid over a 24 month period, rather than lump sum. For calculation purposes North Atlantic treated Ms. Hickey’s annual salary as $102,500. (This annual salary was subsequently accepted by Ms. Hickey for negotiation purposes). [ 16 ] On 30 October 2017 counsel for Ms.

Hickey responded to say, “Your client’s proposal is rejected…” Counsel then countered with a total claim of $135,562.55, comprised of pay in lieu of notice for 14 months at Ms. Hickey’s salary of $102,500 per annum ($119,583.30), RRSP @ 5% $5,979.17, health benefits $6,000, outplacement/legal $4,000. Counsel for Ms.

Hickey wrote that his client would “not agree to salary continuance.” [ 17 ] On 10 November 2017 counsel for North Atlantic wrote, agreeing to the amount of the claim ($135,562.55), but not the method of payment: In terms of the counter-offer contained in your last correspondence, our client is prepared to agree to the amount set out in your correspondence, however, it is not prepared to make the payment in lump sum. Our client is willing to pay the contribution towards legal fees immediately upon our reaching settlement, with the RRSP payment being made on February 28, 2018, assuming that Ms.

Hickey agreed to a matching payment being deducted from the settlement amount. The Company would then pay the remaining settlement funds (less statutory deductions) over an 18 month period on the 15 th day of each month. [ 18 ] This proposal also included a requirement to mitigate. [ 19 ] On 15 November 2017 counsel for Ms.

Hickey replied, rejecting the method of payment: … we have made it abundantly clear that she is not prepared to entertain any arrangement under which your client’s legal obligation to pay damages for failure to provide reasonable notice would be paid out over 24 months, or for that matter over 18 months as your most recent correspondence proposes, particularly when the proposed notice period for immediate settlement was 14 months. In

summary, your client’s proposal is rejected, and we will proceed to issue and serve a Statement of Claim in which we will claim for all our client’s entitlements at common law. [ 20 ] At this point the parties had an agreement on the amount of the settlement, leaving to be resolved the method of payment for pay in lieu of notice. [ 21 ] By way of email on 5 December 2017, counsel for Ms.

Hickey advised counsel for North Atlantic what he was prepared to recommend: At the conclusion of the call I advised I would recommend that my client accept payment of 14 months salary continuance, without any requirement to mitigate, paid out over 14 months from August 10, 2017, along with 4k for the legals and 6k for the insurance benefits paid immediately, and a matching contribution of up to 5 percent of base salary to my client’s RSP, payable before February 28 2018. Mrs.

Hickey has asked me to follow up to determine whether you have instructions to offer the same. [ 22 ] On 6 December 2017 counsel for North Atlantic replied, confirming once again acceptance of the amount of Ms. Hickey’s settlement, but proposing a payout of the pay in lieu of notice over a 14 month period, commencing in January 2018. This time there would be no requirement to mitigate. [ 23 ] On 11 December 2017 counsel for Ms. Hickey replied, rejecting the payment

schedule to commence in January 2018 and proposing instead the immediate payment of the pay in lieu of notice between 16 September 2017 [1] and 21 December 2017, with the remaining balance payable biweekly. [ 24 ] On 18 December 2017 counsel for North Atlantic countered with an alternate payment schedule, one which would continue to see the pay in lieu of notice commence in January 2018, without the requirement to mitigate, but with double payments being made in July and August. [ 25 ] As of 18 December 2017, then, while the parties had long before settled upon the total compensation to be paid Ms.

Hickey, they remained gridlocked on the timing of the payment of the pay in lieu of notice. The principle issue being how much was to be paid over time, versus at the time of closing.

[ 26 ] On 20 December 2018 counsel for Ms. Hickey provided counsel for North Atlantic with the Statement of Claim, as issued, and reiterated his settlement position of 11 December 2017. Counsel for Ms. Hickey wrote that if not acceptable to North Atlantic, he would arrange for formal service of the Statement of Claim. If accepted, this proposal would see Ms. Hickey receive her pay in lieu of notice from 16 September 2017 up to the date of closing, with the balance paid as salary continuance thereafter. [ 27 ] North Atlantic did not formally respond to this proposal.

Rather, shortly thereafter, a new dynamic entered the discussions, the sale of assets by North Atlantic. [ 28 ] In December 2017 Ms. Hickey was advised by an employee of North Atlantic that it had reached an agreement to sell the assets of its fishing division. Ms. Hickey was also informed by this employee that her claim had been settled and funds would be exchanged once the asset sale transaction closed. This latter comment was hearsay, however, coming from an employee without authority to bind North Atlantic, who had been told by someone else that the claim was settled.

I am unable to give it any weight in deciding whether or not an agreement was reached. [ 29 ] According to Mr. Breau, at the time North Atlantic was facing a cash flow crunch and in an effort to remain solvent was engaged in the sale of some of its assets. In fact, it was this cash flow problem which had prompted North Atlantic to resist a lump sum payment to Ms. Hickey. [ 30 ] Mr.

Breau testified that while the closing date of the asset sale was somewhat fluid, there was initially an expectation by North Atlantic that it would be 31 December 2017. [ 31 ] As a consequence, in January 2018 there was a shift in emphasis in the communication between counsel. North Atlantic now sought, for the first time, a delay in the closing of Ms. Hickey’s settlement, pending the completion of its asset sale, after which it would be in funds. [ 32 ] By way of an email dated 8 January 2018 counsel for Ms.

Hickey sought an update from counsel for North Atlantic on whether her client “will now pay the outstanding notice and insurance (less notice amount paid) and the contribution to legals of 4k”. [ 33 ] Counsel for North Atlantic responded by email later that same day to say: Our client’s asset sale transaction has been delayed. Our client is ready to close but is waiting on the Purchaser to tender, which was expected to occur last week and now this week.

I am hopeful once that occurs that we can reach a settlement. [emphasis added] [ 34 ] As he was not prepared to dwell in a “fool’s paradise”, later that same evening counsel for Ms. Hickey sent the following email to counsel for North Atlantic, seeking clarification of her client’s position: Perhaps you can clarify for me whether your client is in fact agreeing to pay the outstanding amounts we proposed and place Ms.

Hickey back on payroll for the duration of the notice period, and we are just dealing with a timing issue on payment, or if your client is not agreeing to pay the outstanding amounts and place her back on the payroll until your client’s closing occurs. If the situation is that we are not “settled” or you are not prepared to confirm that in writing then my instructions are to require the Statement of Defence to be filed by Monday, January 15, 2018.

If you confirm in writing that we are in fact “settled” then my instructions are that my client must be placed back on the payroll for the next pay period which I understand commences on January 13, 2018. In terms of the outstanding amounts, we will accept your undertaking or your client’s direction to pay Ms. Hickey immediately all the outstanding amounts from the closing proceeds. [ 35 ] On the morning of 12 January 2018 counsel for North Atlantic responded, to say: I apologize for the delayed response. I have been in witness prep meetings all week for a hearing I have next week.

I can confirm settlement of the amount owing and in my last email to you should have simply stated that I was hopeful that the matter could be fully resolved (ie: manner and

schedule of payment). I have been advised by our client that a definite transaction closing date has been determined for next Wednesday, January 17 th so I have been instructed to request one further extension to the deadline to file our client’s Defence until Thursday, January 19 th , by which time the requirement to do so may be wholly unnecessary. [emphasis in original] [ 36 ] The response was written to provide Ms.

Hickey with a measure of comfort, the message being that the dollar value of her claim was settled, with the details regarding payout awaiting North Atlantic’s sale of its assets. [ 37 ] Counsel for Ms. Hickey replied by email later that same day, agreeing to the proposed extension of the closing date and asking for confirmation of the proposed amounts of the cheques, in order to ensure that both parties “are on the same page with these details.” [ 38 ] No response was received to this request, prompting counsel for Ms.

Hickey to send a follow up email on 17 January 2018, looking for time “to finalize the details on the payments” and confirm the date at which Ms. Hickey would be placed back on the payroll. [ 39 ] Counsel for North Atlantic replied by email on 19 January 2018, to say: I apologize for the delayed response but I have not been able to obtain instructions from our client yet. I understand the transaction is well underway but that the Company is not in funds yet . To safeguard our client’s interests, we will file a Defence today but hope that

we can continue towards a final resolution in the coming days, once I am able to get my client’s full attention. [emphasis added] [ 40 ] Counsel for Ms. Hickey replied by email an hour later thanking counsel for North Atlantic for her response and to say that “I look forward to fully resolving the matter”, as per the previous exchange of emails. [ 41 ] The asset sale by North Atlantic did eventually close, which according to Mr. Breau netted the company some $1.7 million, but the final resolution of Ms. Hickey’s settlement was not forthcoming.

On 12 February 2018 counsel for North Atlantic sent an email to counsel for Ms. Hickey to say : I too am hoping to conclude this matter soon. I can confirm that the sale did close last week. I do not have instructions at this time. I am hoping to speak to Steve Fitzgerald either today or tomorrow regarding the matter. [ 42 ] While counsel for North Atlantic remained hopeful at concluding the matter “soon”, red flags were beginning to appear. She was unable to obtain “instructions” and a change of North Atlantic’s legal counsel was on the horizon. [ 43 ] The following day counsel for Ms.

Hickey was informed that counsel who argued the within application would take over carriage of the matter. North Atlantic then adopted the position that as the payment

schedule for the pay in lieu of notice had not been finalized, it did not have a binding agreement with Ms. Hickey. [ 44 ] In March 2018, North Atlantic provided a new offer to settle for a lower amount than previously agreed and with a string of new conditions unrelated to Ms. Hickey’s dismissal. These conditions related to the transfer of shares in North Atlantic. analysis [ 45 ] For there to be a legally binding agreement, the essential terms of the bargain must be agreed and possess a sufficient degree of clarity.

It is not for the court to fill in essential terms in an otherwise incomplete agreement (see Mifflin v. North Atlantic Refining Limited , 2017 NLTD(G)140). [ 46 ] As noted, the parties acknowledge that there was an agreement on the amount of compensation to be paid Ms. Hickey, ($135,562.55) and the composition of this payment. It is comprised of those amounts as set forth in the email from counsel for Ms. Hickey dated 30 October 2017, as first accepted by North Atlantic on 10 November 2017 and subsequently confirmed on 6 December, 18 December 2017 and 12 January 2018. [ 47 ] Where the parties

part company is on the timing and method of payment of the pay in lieu of notice portion of the settlement. [ 48 ] The timing and method of payment was a contentious issue from the very beginning of the negotiations and remained so in December 2017. For cash flow reasons North Atlantic resisted any payment by lump sum and sought to stretch the pay in lieu payments to Ms. Hickey beyond the 14 months which had been agreed as the notice time period. For her part, Ms.

Hickey explained that as she was in receipt of EI benefits, which would have to be repaid, she could not afford to stretch her pay in lieu of notice beyond the 14 months. She had received no income from North Atlantic since 15 September 2017. [ 49 ] There can be no doubt that throughout negotiations, and after the amount of settlement was resolved, the terms of payment of pay in lieu of notice (the lion’s share of the quantum) was in issue. These negotiations continued up until 20 December 2017 when counsel for Ms.

Hickey reiterated her position that she would accept pay in lieu of notice by lump sum from 16 September 2017 to the date of settlement, with the remaining pay in lieu of notice by way of salary continuance thereafter. Were the discussions to end at this point I would be left to conclude that the method of payment was an essential term of the settlement, and as there was no consensus, there could be no agreement. [ 50 ] The discussions did not end at this point, however. [ 51 ] After 20 December 2017 there was a shift in focus, driven by a pending asset sale by North Atlantic.

This had not been the subject of prior discussions and there is nothing in the previous exchanges between counsel to suggest that North Atlantic’s willingness to settle with Ms. Hickey was contingent on the sale of its assets. Rather, the question now became one of timing, North Atlantic wanted to be “in funds” before completing the deal. [ 52 ] On 20 December 2017 counsel for Ms. Hickey reiterated her position regarding payment in lieu of notice (the only outstanding item at that time) for the last time.

If this proposal was unacceptable, North Atlantic could have simply said so and that would have been the end of the matter. While I accept that silence does not equate to acceptance, North Atlantic went further. In the face of the 20 December 2017 proposal, it continued to hold out the carrot of a final “resolution”, if only Ms. Hickey would agree to such extensions as necessary for North Atlantic to consummate its asset sale. [ 53 ] Were the situation otherwise North Atlantic was given every opportunity to set the record straight, when asked point blank by counsel for Ms.

Hickey, on 8 January 2018, whether the matter was in fact “settled”. [ 54 ] Instead, North Atlantic responded through its counsel to confirm that Ms. Hickey’s compensation was settled, but the manner and

schedule of payment could not be fully “resolved” until after the asset sale. The reply is nuanced, designed to keep Ms. Hickey on the hook until North Atlantic could conclude its asset sale. Mr. Breau explained that he had a lot on his plate at the time and did not need the distraction of a lawsuit. [ 55 ] On 19 January 2018 counsel for North Atlantic wrote to advise that while the transaction (i.e. the asset sale) is “well underway”, North Atlantic is not “in funds” yet. At this point, counsel for North Atlantic was unable to obtain instructions from her client but expressed hope that the parties could continue toward a “final resolution” in the coming days once she was able to get her

client’s “full attention.” [ 56 ] What is the significance of North Atlantic being “in funds”? For Ms. Hickey, the significance could only relate to North Atlantic’s ability to finally conclude her settlement. [ 57 ] On 12 February 2018 counsel for North Atlantic confirmed that the asset sale had concluded the previous week and that she was “hoping to conclude this matter soon.” As events unfolded counsel for North Atlantic, who had been engaged in the negotiations, eventually found herself in an untenable position.

She was instructed to seek a delay in final resolution until the asset sale was complete and then found herself unable to obtain instructions. [ 58 ] At the behest of North Atlantic, the sale of its assets (as a means of reliving its cash flow problems) took on a prominence in its settlement of Ms. Hickey’s claim. On several occasions, Ms. Hickey was asked to forbear on the final resolution of her settlement until the asset sale was complete at which time North Atlantic would be in funds. Throughout this period North Atlantic was in possession of Mr.

Hickey’s position regarding the payment of her pay in lieu of notice. [ 59 ] Ms. Hickey waited for the asset sale to conclude, as requested by North Atlantic, only to be told by North Atlantic’s new counsel that it was taking the position that her claim was not settled after all. Why, then did North Atlantic string Ms. Hickey along for over a month, with the expectation that once the asset sale closed she would get her money. [ 60 ] In Iofcea v. Dinoiu , 2018 ONSC 6882 McDermot, J. stated (at paragraph 28): 28. The test is not subjective.

The issue is whether a reasonable person standing in the position of either of the parties or observing the circumstances surrounding the making of the agreement, would have believed or understood that the parties were making a final agreement on all essential issues sought to be settled: see Swift v. Swift , 2010 ONSC 6049 (Ont. S.C.J.) at para 35 , Lundrigan v. Andrews , 2009 CarswellOnt 883 (Ont. C.A.) at para 8 and Halpern v. Halpern , 2014 ONSC 4246 (Ont. S.C.J.) at para 21 . [ 61 ] As a consequence of the overtures to Ms.

Hickey in January 2018, I am satisfied that an objective observer would conclude that the means by which Ms. Hickey would receive her agreed upon pay in lieu of notice was no longer an essential term of settlement . That is to say, the timing of payment was no longer a matter of contract formulation, but was needed to implement the settlement (i.e. to see if fully “resolved”). The sale of assets by North Atlantic resulted in a shift in focus such that North Atlantic was now more interested in obtaining Ms. Hickey’s forbearance until such time as it was “in funds”.

At this stage in the process what had been a contentious issue throughout, was now, in the face of the asset sale, a matter of process. [ 62 ] It was entirely reasonable for Ms. Hickey to conclude as she did, that upon completion of North Atlantic’s asset sale she would receive the proceeds of her settlement, including pay in lieu of notice from 16 September 2017 to that date, with the balance of the pay in lieu of notice to be paid out over the notice time remaining. Viewed objectively, such in my view is a reasonable

interpretation of North Atlantic’s response to Ms. Hickey’s last claim demand, in its repeated requests to postpone the final resolution until after the asset sale. It North Atlantic was rejecting Ms. Hickey’s proposal on the manner of payment, it could simply have said so. It did not. disposition [ 63 ] For the foregoing reasons I conclude that Ms. Hickey and North Atlantic reached a binding settlement of Ms. Hickey’s claim for wrongful dismissal, which settlement was repudiated by North Atlantic. The amount of the settlement is as set forth in counsel for Ms.

Hickey’s 30 October 2017 email, as follows: Pay in lieu of notice $119,583.30 RRSP at 5% 5,979.17 Health Benefits 6,000.00 Outplacement legal 4,000.00 TOTAL $135,562.55 (less statutory deductions as applicable and amounts paid to date) [ 64 ] If honored by North Atlantic, Ms. Hickey would have been entitled to receive pay in lieu of notice from 16 September 2017 to the date of closing, being the completion by North Atlantic of its asset sale, and salary continuance for the balance thereafter. As the salary continuance time has since lapsed, Ms.

Hickey is entitled to judgment for the full amount of $135,562.55 less statutory deductions, as applicable, and amounts paid by North Atlantic to date. [ 65 ] As requested, the parties have leave to be heard on the issue of costs. _____________________________ Donald H. Burrage Justice